Savers desert stock market amid fears of another global recession

Sa vers desert stock market amid fears of another global recession

Savers are abandoning the stock market at a rate not seen since the financial crisis of 2008 amid fears that another global recession is looming, The Daily Telegraph has found....

High inflation, the US debt crisis and ongoing problems in eurozone countries such as Greece, Portugal and Ireland have left ordinary investors feeling that they have “nowhere to hide”, experts said....

The growing uncertainty in the safety of the stock market came as the FTSE 100 index dropped by one per cent - wiping £15billion off the value of Britain’s most successful companies after poor economic data from the United States. The index has fallen two per cent in the past week....

Such is the growing uncertainty in the markets that Moody’s, the credit rating agency, yesterday threatened to downgrade Spain as the eurozone’s troubles continue.

Private investors too have become so rattled they are putting just a 10th of the average amount placed in the stock market in recent months....

Sales of gold funds increased 58 per cent last week, according to Barclays Stockbrokers, and sales of BlackRock’s Gold and General fund increased 33 per cent between June and July.

The most worried investors are selling stocks now and switching their investments into cash, in spite of the risk that it will be eroded by inflation....

In Europe, Moody’s said it was reviewing Spain’s credit rating and would probably downgrade it by one level. Shortly after this warning, the Spanish government called a surprise early election for November....

John Chatfeild-Roberts, the chief investment officer for Jupiter Asset Management, said that the developed economies would struggle for “several more years”.

“The whole developed world is struggling with being over-indebted,” he said. “There are problems with UK and US property markets, economic deficits, Greece, Spain and Ireland.

“Authorities are trying desperately not to let debt default and at the same time inject economies with inflation so that the debt is reduced. Savers bear the brunt of this.

“Unfortunately we think this will go on for quite some time – several years. It can gradually wind down, but we have to wait.”

I'm posting this article, not because I suggest the stock market performance this week is any reason to raise alarm bells, but because it cites a number of problems that together are brewing a rapidly deepening crisis.

I doubt it is all going to continue for several years unless there are plans to accommodate with some massive monetary stimulus. But I don't see where all the money is coming from and there are already frustrations in some European countries about sharing the debt burdens.

It's quickly becoming a losing battle, and I think the bigger problems are in Europe, and when the Eurozone has its implosion, then contagious effects are going to spread around the world with some major financial and economic repercussions.

Another global recession or depression? The world economy in demise? A trigger coming from Europe that could see a global collapse? How is this unsustainable situation going to continue for much longer?

A couple of other articles appearing on Bloomberg:

Spain in ‘Danger Zone’ on Europe Crisis: IMF

Spain is still in “the danger zone” and must keep up momentum in restructuring its economy to stave off contagion from Europe’s sovereign-debt crisis, the International Monetary Fund said.

“The outlook is difficult and the risks elevated,” the Washington-based IMF said in a report yesterday after a visit by staff to Spain. “The policy agenda remains challenging and urgent -- there can be no let up in the reform momentum.”

S&P 500 Posts Biggest Drop Since July 2010

U.S. stocks fell five straight days, driving the Standard & Poor’s 500 Index to its biggest weekly loss in a year, as lawmakers’ failure to agree on raising the federal government’s debt limit brought the nation to the brink of default.

July 2010 is about the time last year when there were fears of another double dip recession. The only difference now is that this is likely the real deal.

I dont know if the smart money is phased by all these potential defaults,defaults effect bonds and treasuries from which the money will be taken out and invested elsewhere,in cash if interest rates go up but also stocks,plus most large corporations now are multinational and poor performance in one part of the world does not necessarily mean a poor earnings report.

Treasury Yields Fall to 2011 Lows Amid Deadlock

Treasuries surged, driving 10- and 30-year yields to the lowest levels this year, as U.S. lawmakers deadlocked over raising the debt limit and the economy grew more slowly than forecast.

Benchmark 10- and 30-year debt rose in July the most in almost a year, and Treasuries’ returns recouped all of their June losses. At the same time, rates climbed on bills maturing just after the Aug. 2 debt-cap deadline. The economy added fewer-than-average jobs this month, a report next week is forecast to show.

Hey other than the obvious subject of this article being about falling treasury yields, it seems Bloomberg has flagged that there will be another poor US jobs report next week for the month of July. Another clear indicator of conditions deteriorating further into a crisis.

reply to post by surrealist

I agree August will see deteriation but the big money doesn't move till the third Friday in September(triple witching)by then it could be interesting.

ya know, all this on again off again, we have a deal...we don't have a deal....
well, isn't it putting the markets on a kind of rollor coaster, as people react???

if so, well, isn't it possible that it's all a show, and some very informed people are in the background, getting the it's on, it's off, ahead of everyone else, and well, cashing in big time??

could this be more of a kind of a market manipulation than it is any crisis???
I mean, according to some, the fed gave away more money than our debt!!
if our debt is a major crisis, then them just giving that kind of money away should have been just as big of a concern, and I don't hear too much of about that one really, all hush, hush, it's a secret, and it was a secret, according to what I read, till congress forced them to reveal what they were doing!!!